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This book examines traditional insurance risks such as earthquakes, storms, terrorist attacks, and other disasters. It begins with a discussion of how the risk of such “acts of God and men” impact on our lives, health, and possessions. It then proceeds to introduce the statistical techniques necessary for analyzing these uncertainties. It explains that quantifying the risks that such disasters pose is difficult but that it is crucial for achieving the financing objectives of insurance. The book guides readers through the methods available for identifying and measuring such risks, financing their consequences, and forecasting their future behaviour (within the limits of science). It also considers the experience of risk from the perspectives of both policyholders and insurance companies, and compares their respective responses. The discussion of the risks inherent in the private insurance industry leads to a discussion of the government's role as both market regulator and potential “insurer of last resort.” The book concludes with an interdisciplinary investigation into the nature of uncertainty, incorporating ideas from physics, philosophy, and game theory to assess science's limitations in predicting the ramifications of risk.

This book assesses how learning helps countries grow, develop, and become more productive. It looks at what government can do to promote learning and casts light on the significance of learning for economic theory and policy. It explains that the thing that truly separates developed from less-developed countries is not just a gap in resources or output but a gap in knowledge. It shows that the pace at which developing countries grow is largely a function of the pace at which they close this knowledge gap. The book takes as its starting point Kenneth J. Arrow's 1962 paper “Learning by Doing,” and explains why the production of knowledge differs from that of other goods and why market economies alone typically do not produce and transmit knowledge efficiently. It shows that closing knowledge gaps and helping laggards learn are central steps to growth and development. It also argues that creating a learning society is crucial if we are to sustain improved living standards in advanced countries. It provides new models of “endogenous growth” and shows how well-designed government trade and industrial policies can help create a learning society, while poorly designed intellectual property regimes can retard learning. It also explains how virtually every government policy has effects, both positive and negative, on learning. It argues that free trade may lead to stagnation whereas broad-based industrial protection and exchange rate interventions may bring benefits—not just to the industrial sector, but to the entire economy.

This book revisits the causes of the 2008 global economic collapse, re-evaluating the international response to the crisis and suggesting more effective approaches to development cooperation. It explains how leading governments undertook extraordinary measures to offset the 2008 economic crisis, shoring up financial institutions, stimulating demand to reverse recession and rebalancing budgets to alleviate sovereign debt. The book argues that, while these measures were productive in and of themselves, they were effective because they were coordinated internationally and were matched with sweeping global financial reforms. The volume then shows that, unfortunately, international coordination has weakened after these initial steps. It therefore argues that one of the crisis' adverse effects will be a significant reduction in development cooperation. In response to this challenge, the book redesigns the international cooperation system and its governance, so that it can accept new actors and better achieve the Millennial Development Goals of 2015 within the context of a severe global crisis. Overall, the book provides an assessment of global economic imbalance and the potential of increased cooperation to rectify these inequalities.

This book offers innovative policy ideas and insightful commentary on the United States' pressing economic issues, such as global warming, the global economy, government spending, Social Security, tax reform, real estate, and political and social policy, including an extensive look at the economics of capital punishment, welfare reform, and the recent presidential elections. The book takes a hard look at the high cost of the Iraq War, and provides insight and advice on global warming. It demystifies Social Security and presents divergent views on the coming dollar crisis. The book reconsiders the impact of U.S. offshoring. It distinguishes what is “sense” and what is “nonsense” in discussions of federal deficits and debt, and points out the consequences of the deindustrialization of America. It further questions whether welfare reform was successful and explores the economic consequences of global warming and the rebuilding of New Orleans. The book describes how a simple switch in auto insurance policy could benefit the environment, and it unravels the dangers of an unchecked housing bubble and investigates the mishandling of the lending institutions Freddie Mac and Fannie Mae. Balancing empirical data with economic theory, the book proves that the unique perspective of the economist is a vital one for understanding today's world.

The Economists’ Voice: Top Economists Take On Today’s Problems featured a core collection of accessible, timely essays on the challenges facing today’s global markets and financial institutions. This book is the next installment in this series, gathering together the strongest essays published in The Economist’s Voice, a nonpartisan online journal, so that students and general readers can gain a deeper understanding of the financial developments shaping their world. The chapters tackle the plain economics and architecture of health care reform, its implications for society and the future of the health insurance industry, and the value of the health insurance subsidies and exchanges built into the law. The book considers the effects of financial regulatory reform, the possibilities for ratings reform, and the issue of limiting bankers’ pay. An objective examination of the financial crisis and bank bailouts results in two chapters on investment banking regulation after Bear Stearns and the positives and negatives of the Paulson/Bernanke bailout. The chapters weigh the merits of future rescues and suggest alternative strategies for addressing the next financial crisis. A final section examines a unique array of topics: the stability of pension security bonds; the value of a carbon tax, especially in fostering economic and environmental sustainability; the counterintuitive perils of net neutrality; the unforeseen consequences of government debt; the meaning of the Google book search settlement; and the unexploited possibilities for profit in NFL overtime games.

This book is about the complexities of economic policy and financial reform. Merging a compelling narrative with scholarly research, it begins with a systematic breakdown of the factors leading to America's recent recession, describing the monetary policy, tax practices, subprime mortgage scandals, and lax regulation that contributed to the crisis. The book also discusses the Treasury-Federal Reserve rescue deals that saved several financial institutions and the involvement of Congress in passing restorative policies. The book follows with an analysis of stress tests and other economic measures, and it assesses whether the U.S. economy is truly on the mend. It considers the prospects for recovery in North America as a whole, as well as in Europe, Asia, and South America, and the extent and value of U.S. and E.U. regulatory proposals. Refocusing on American financial practices, the book evaluates hedge funds and derivatives, credit default swaps, and rating agencies, pondering whether the dollar can remain a reserve currency. It concludes with a historical comparison of the Great Depression and the Great Recession, weighing the effect of the economic collapse on the future of American capitalism.

Essential resources do more than satisfy people’s needs. They ensure a dignified existence. Since the competition for essential resources, particularly fresh water and arable land, is increasing and standard legal institutions, such as property rights and national border controls, are strangling access to resources for some while delivering prosperity to others, many are searching for ways to ensure their fair distribution. This book argues that the division of essential resources ought to be governed by a combination of Voice and Reflexivity. Voice is the ability of social groups to choose the rules by which they are governed. Reflexivity is the opportunity to question one’s own preferences in light of competing claims and to accommodate them in a collective learning process. Having investigated the allocation of essential resources in places as varied as Cambodia, China, India, Kenya, Laos, Morocco, Nepal, the arid American West, and peri-urban areas in West Africa, the contributors to this volume largely concur with the viability of this policy and normative framework. Drawing on their expertise in law, environmental studies, anthropology, history, political science, and economics, they weigh the potential of Voice and Reflexivity against such alternatives as pricing mechanisms, property rights, common resource management, political might, or brute force.

Many believe economic growth is incompatible with ecological preservation. Green Capital challenges this argument by shifting our focus away from the scarcity of raw materials and toward the deterioration of the great natural regulatory functions (such as the climate system, the water cycle, and biodiversity). Although we can find substitutes for scarce natural resources, we cannot replace a natural regulatory system, which is incredibly complex. It is therefore critical that we introduce a new price into the economy that measures the costs of damage to these regulatory functions. This change in perspective justifies such innovations as the carbon tax, which addresses not the scarcity of carbon but the inability of the atmosphere to absorb large amounts of carbon without upsetting the climate system. Brokering a sustainable peace between ecology and the economy, Green Capital describes a range of valuation schemes and their contribution to the goals of green capitalism, proposing a new approach to natural resources that benefits both businesses and the environment.

This book provides a behind-the-scenes look at what companies in China, India, Japan, Korea, the Philippines, Indonesia, Hong Kong, Singapore, and Thailand are doing to build businesses that will lessen the environmental impact of Asia’s extraordinary economic growth. Dirty air, foul water, and hellishly overcrowded cities are threatening to choke the region’s impressive prosperity. Recognizing a business opportunity in solving social problems, Asian businesses have developed innovative responses to the region’s environmental crises. From solar and wind power technologies to green buildings, electric cars, water services, and sustainable tropical forestry, Asian corporations are upending old business models in their home countries and throughout the world. Companies have the money, the technology, and the people to act—yet support from the government (in the form of more effective, market-friendly policies) and the engagement of civil society are crucial for a region-wide shift to greener business practices. The book paints detailed profiles of what some of these companies are doing and includes a unique appendix that encapsulates the environmental business practices of more than fifty companies.

This volume connects the evolving modern financial systems of China, Japan, and Korea to the development and growth of their economies through the first decade of the twenty-first century. It also identifies the commonalities among all three systems while accounting for their social, political, and institutional differences. Chapters consider the reforms of the Chinese economy since 1978, the underwhelming performance of the Japanese economy since about 1990, and the growth of the Korean economy over the past three decades. These economies engaged in rapid catch-up growth processes and share similar economic structures. Yet while domestic forces have driven each country's financial trajectory, international short-term financial flows have presented opportunities and challenges for them all. The nature and role of the financial system in generating real economic growth, though nuanced and complex, is integral to these countries.

The revival of economic growth in Sub-Saharan Africa is all the more welcome for having followed one of the worst economic disasters—a quarter century of economic malaise for most of the region—since the industrial revolution. Six of the world’s fastest-growing economies in the first decade of this century were African. Yet only in Ethiopia and Rwanda was growth not based on resources and the rising price of oil. Deindustrialization has yet to be reversed, and progress toward creating a modern economy remains limited. This book explores the vital role that active government policies can play in transforming African economies. Such policies pertain not just to industry. They traverse all economic sectors, including finance, information technology, and agriculture. These packages of learning, industrial, and technology (LIT) policies aim to bring vigorous and lasting growth to the region. This collection features case studies of LIT policies in action in many parts of the world, examining their risks and rewards and what they mean for Sub-Saharan Africa.

This updated second edition explores basic and fundamental investing concepts in a range of fields outside of economics, including physics, biology, sociology, psychology, philosophy, and literature. It discusses how the theory of evolution disrupts the notion of the efficient market and how reading strategies for literature can be gainfully applied to investing research. Building on Charlie Munger's famous “latticework of mental models” concept, the book argues that it is impossible to make good investment decisions based solely on a strong knowledge of finance theory alone. The concepts are reinforced with additional data and a new chapter on mathematics, and updated text throughout to reflect the developments of the past decade, particularly the seismic economic upheaval of 2008. Additionally, a hundred new titles have been added to the book's reading list.

Latin American neo-structuralism is a cutting-edge, regionally focused economic theory with broad implications for macroeconomics and development economics. Roberto Frenkel has spent five decades developing the theory’s core arguments and expanding their application throughout the discipline, revolutionizing our understanding of high inflation and hyperinflation, disinflation programs, and the behavior of foreign exchange markets as well as financial and currency crises in emerging economies. The essays in this collection assess Latin American neo-structuralism’s theoretical contributions and viability as the world’s economies evolve. The authors discuss Frenkel’s work in relation to pricing decisions, inflation and stabilization policy, development and income distribution in Latin America, and macroeconomic policy for economic growth. An entire section focuses on finance and crisis, and the volume concludes with a neo-structuralist analysis of general aspects of economic development. For those seeking a comprehensive introduction to contemporary Latin American economic thought, this collection not only explicates the intricate work of one of its greatest practitioners but also demonstrates its impact on the growth of economics.

After four decades spent ascending to the top of the investment management profession, the author of this book is today sought out by the world's leading value investors, and his client memos brim with insightful commentary and a time-tested, fundamental philosophy. Informed by the author's experience and study, this book explains the keys to successful investment and the pitfalls that can destroy capital or ruin a career. Utilizing passages from his memos to illustrate his ideas, the author teaches by example, detailing the development of an investment philosophy that fully acknowledges the complexities of investing and the perils of the financial world. Brilliantly applying insight to today's volatile markets, the book offers a volume that is part memoir, part creed, with a number of broad takeaways. It expounds on such concepts as “second-level thinking,” the price/value relationship, patient opportunism, and defensive investing. The book provides valuable lessons for critical thinking, risk assessment, and investment strategy. Encouraging investors to be “contrarian,” it wisely judges market cycles and achieves returns through aggressive yet measured action. Which element is the most essential? Successful investing requires thoughtful attention to many separate aspects, and each of the book's subjects proves to be the most important thing.

In The Most Important Thing investing insight of this book’s author’s celebrated client memos was distilled into a single text and made his philosophy available to general readers. In this book, this wisdom is joined by the comments, insights, and counterpoints of four renowned investors and investment educators. These experts lend insight into the most important concepts in successful investing, such as “second-level thinking,” the price/value relationship, patient opportunism, and defensive investing. The author also adds his own annotations, expanding on his book’s original themes and issues. A new chapter addresses the importance of reasonable expectations, and a foreword by Bruce C. Greenwald, called “a guru to Wall Street’s gurus” by the New York Times, speaks on value investing, productivity, and the economics of information. The book provides valuable lessons for critical thinking, risk assessment, and investment strategy. Encouraging investors to be “contrarian,” he judges market cycles and achieves returns through aggressive yet measured action. Which element is the most essential? Successful investing requires thoughtful attention to many separate aspects, and each of the book’s subjects proves to be the most important thing.

Using evolution as the template to understand growth, this book takes a first-principles approach to explore the parallels between economic and ecological systems. Not only does the book show how value is born out of tiny sparks of adaptive innovation, but it also explores the full scope of the economy as a complex network. The text borrows from an array of disciplines—including anthropology, psychology, ecology, physics, sociology, and ethics—and, most revealing of all, examines how evolution's processes can help investors avoid risk and improve their allocation decisions. Starting with a look at how innovation creates value for firms, the book considers the economic niches where companies compete and explores how they can create defensive moats to enhance their ability to survive. Throughout, the text demonstrates how this ecological understanding of the economy can help allocators improve their performance, supporting the arguments with data and experience from scientific, social, and economic disciplines.

This book draws attention to migration's developmental impacts on sending and receiving societies. Through current case studies, it examines the interplay among migration, development, culture, family reunification, human rights, and government, all with the aim of advancing more effective solutions to international migration issues. The volume's multidisciplinary perspective combines theoretical discussions with empirical applications, appealing to both academics and policymakers eager to maximize migration's developmental impacts. The book begins with a discussion detailing when and why migration promotes growth and what kind of indicators beyond GDP should be considered. Challenging a number of misconceptions, such as the assumption that redressing poverty and alleviating underdevelopment in immigrant communities are solely economic pursuits, chapters acknowledge the inherent cultural dimension in the migration-development debate and define the contours of a research program that systematically and comparatively weighs the cultural dynamics of development and migration. The chapters also emphasize the role of human rights in reinforcing positive developmental outcomes, how traditional social roles and its developmental impacts are reshaped by the international migration of women and children, and international migration's developmental impacts within specific geographic regions.

To understand business and its political, cultural, and economic context, it helps to view it historically, yet most business histories look no further back than the nineteenth century. The full sweep of business history actually begins much earlier, with the initial cities of Mesopotamia. This book depicts the society of ancient traders and consumers, tracing the roots of modern business and underscoring the relationship between early and modern business practice. This narrative begins before business, which it defines as selling to voluntary buyers at a profit. Before business, it shows, the material conditions and concepts for the pursuit of profit did not exist, even though trade and manufacturing took place. The earliest business, the book suggests, arose with the long-distance trade of early Mesopotamia, and expanded into retail, manufacturing, and finance in these command economies, culminating in the Middle Eastern empires. But it was the largely independent rise of business, money, and markets in classical Greece that produced business much as we know it. Alexander the Great's conquests and the societies that his successors created in their kingdoms brought a version of this system to the old Middle Eastern empires, and beyond. At Rome this entrepreneurial market system gained important new features, including business corporations, public contracting, and even shopping malls. The story concludes with the sharp decline of business after the third century ce.

This text argues that uncertainty is central rather than marginal to finance. Markets don't trade mainly on changes in risk. They trade on changes in beliefs about risk, and in the process, markets unite, stretch, and occasionally defy beliefs. Recognizing this truth would make a world of difference in investing. Belittling uncertainty has created a rift between financial theory and practice and within finance theory itself, misguiding regulation and stoking huge financial imbalances. Sparking a revolution in the mindset of the investment professional, this text recasts the market as a learning machine rather than a knowledge machine. The market continually errs, corrects itself, and makes new errors. Respecting that process, without idolizing it, will promote wiser investment, trading, and regulation. With uncertainty embedded at its core, the book's rational approach points to a finance theory worthy of twenty-first-century investing.

Paul Cabot (1898–1994) was an innovative mutual fund manager and executive known for his strong character, charismatic personality, and trendsetting financial achievements. Iconoclastic and rebellious, Cabot broke free from the Boston Brahmin trustee mold to pursue new ways of investing and serving investment clients. Cabot founded one of the first mutual funds—State Street Investment Corporation—in the early 1920s, campaigned against the corrupt practices of certain other funds in the late 1920s, and lobbied on behalf of key New Deal securities legislation in the 1930s. As Harvard University treasurer, he increased the allocation of the endowment to equities just in time for the bull market of the 1950s, and as a corporate director in the 1960s he campaigned against conglomerates’ abusive takeover strategies. This book details the secrets behind Cabot’s extraordinary success and relates the life of an extraordinary man. Cabot pioneered the use of fundamental stock analysis and was likely the first to take up the progressive practice of interviewing company managements. His accomplishments all stemmed from his passion for facts, finance, and creative thinking, as well as his unbreakable will, facets the book illuminates through privileged access to Cabot’s papers and a wealth of interviews.